Retirement Planning

Retirement Planning

Pension Products

A pension fund is a retirement savings vehicle arranged by an employer to provide for a lumpsum and income upon the employee leaving the service of the employer due to age, ill-health, or retrenchment.

A pension fund is a systematic and separate entity from the employer overseen by a Board of Trustees.

Pension Contributions

In terms of current legislation all pension funds must be contributory which means that employees must make contributions to the pension fund. The contribution levels are based on affordability and industry trends.

Employee contributions range between 3% and 10% whilst NSSA contributions are payable separate to the occupational pension scheme. The employee may make additional voluntary contributions of any amount.
Employer contributions are generally more than the employee contributions since the employer also pays for the Group Life Assurance cost and administration fees.

Retirement Age

A fund must select a common retirement age known as the normal retirement age and this must be between 55 and 70. It is common to have 65 as the normal retiring age and 55 as an early retirement age. An employee may however retire earlier than age 55 on account of ill health or retrenchment. An employee may also defer retirement beyond age 65 but must retire from the pension fund at age 70.

Preservation Fund

Is a retirement savings plan which caters for individuals who withdraw from a pension fund for a variety of reasons and want to preserve their retirement savings until retirement age. However, preservation is compulsory for employer contributions and optional for employee contributions. It is also open to individuals who desire to save for retirement and other purposes. The product has the following features:

Group Life Assurance Cover -The Fund provides cover that is expressed in terms of the amount invested.

Additional contributions - Individuals who are members of this fund are not strictly required to make regular monthly contributions but can make ad hoc lump sum contributions to enhance their retirement package.